Historic increase of Rs 30 billion to BOP with unanimous shareholder approval
LAHORE – Bank of Punjab has entered a new phase of growth following a vote of confidence from its shareholders. At its extraordinary general meeting, shareholders unanimously approved an equity injection of Rs 30 billion from the Punjab government, strengthening the bank’s capital base and supporting its plans for sustainable balance sheet growth and expansion in key banking segments.
President and CEO Mr. Zafar Masood answered the queries raised by the shareholders, which were answered to his satisfaction.
BOP is currently the least capitalized bank among Pakistan’s top ten banks, with Tier-1 capital of PKR 2,952 billion against total assets of PKR 99.9 billion, and will remain ninth even after the full equity injection. A bank’s ability to grow its balance sheet depends on both the strength of its Tier-1 capital and its ability to mobilize low-cost deposits. These are interconnected, as deposits can only be invested in earning assets within the applicable capital adequacy and leverage requirements.
The additional equity will therefore enable BOP to mobilize and deploy a large deposit base safely and productively across its corporate, commercial, SME, agriculture, housing, digital and Islamic banking businesses as well as its proposed overseas wholesale banking unit. It will also strengthen the bank’s ability to compete with larger banks, particularly in mobilizing low-cost deposits.
GoPb’s decision reflects its confidence in a bank that has become a major contributor to provincial coffers. BOP has paid out over PKR 15 billion in dividends since 2021, including PKR 3 billion in the first six months of 2026 alone. Over the same period, GoPb’s investment value has increased nearly sevenfold, while BOP was the best performing banking stock in Asia in 2025. The proposed injection represents general development capital. All deployments of this capital, including government-related business, will be subject to the Bank’s normal credit, risk, pricing and profitability standards.
A rights issue of this scale would have required fresh funds from all shareholders and created uncertainty regarding subscription, timing and completion. About 80% of the recent rights issues on the Pakistan Stock Exchange were priced at a discount. Of the ten rights issues since November 2024, only two cost a premium, and both were substantially smaller than the BOP’s proposed offer. GoPb’s direct subscription provides committed capital with greater certainty of amount, timing and execution. It will also be issued at a premium to both the market price and breakup value, resulting in fewer new shares and less dilution. Minority shareholders do not need to invest additional funds, yet they will fully share in the benefits of a better capitalized bank.
The bank comfortably meets its regulatory capital and leverage requirements and holds a AAA long-term credit rating. Its non-performing loan ratio fell from 9.7 percent in 2021 to 4.8 percent in the first half of 2026, while the weighted obligor risk rating rose to 3.6 from 4.0 three years ago. The Punjab government’s schemes amount to Rs 182 billion, or about 18 percent of the portfolio, of which more than 17 percent is covered by government guarantees. These schemes account for only 3% of the bank’s total non-performing loans, while recovery rates on larger programs range from 97% to 100%. Equity injection is therefore an active growth-capital measure, not a portfolio stress-driven reinvestment.
The shares will be issued at a premium of PKR 38.20 per share or the prevailing market price at the time of issue plus 5% premium. The PKR 38.20 floor price is the base case value determined by KPMG Taseer Hadi & Company as an independent valuation, and is approximately 20% higher than the audited break-up value of PKR 31.83 per share. Accordingly, the shares cannot be issued at a discount below PKR 38.20 or the prevailing market price. The premium will accrue to the bank’s net assets for the benefit of all shareholders. After the full injection at the floor price, GoPb’s shareholding will increase from 57.47% to 65.71%, while minority shareholders will remain above all basic statutory limits. The issuance does not create any new power for the majority shareholder.
A short-term mechanical reduction in earnings per share and return on equity may occur if new shares are counted before the additional capital is fully deployed. However, capital will be raised in stages and invested in profitable, risk-adjusted growth. The resulting incremental earnings are expected to absorb the initial weakness and keep the post-injection return on equity competitive with the industry. The book value per share will be enhanced rather than diluted, while the new shares will rank pari passu to the declared dividend after the issue.
Subject to all required regulatory approvals, cash subscriptions worth PKR 15 billion to PKR 20 billion are expected to be issued to GoPb by 31 December 2026, with the remaining PKR 10 billion to PKR 15 billion expected by 30 June 2027. Until all shares are redeemed and reissued.
Commenting on the development, Mr. Zafar Masood, President and CEO, Bank of Punjab said:
“This is growth capital for a growing bank. Bank of Punjab is well-capitalized, liquid and stable; we are building the capacity required for the scale of business we want to launch. Pricing is transparent and market-linked, and the premium accrues to the bank. Any weakness shareholders can see on paper, is temporary; it is capital, capacity and earnings worthy.”
The post BOP increased investment by 30 billion rupees with the unanimous approval of shareholders appeared first on Daily Pakistan English News.
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